Forex Update: India's Foreign Exchange Reserves Decline $7.27 Billion To $594.9 Billion

India’s forex reserves dropped by $7.273 billion to $594.888 billion for the week ended August 18, according to the latest data from the RBI. In the previous reporting week, the overall reserves had risen by $708 million to $602.161 billion.

The country’s forex kitty had reached an all-time high of USD 645 billion in October 2021. The reserves took a hit as the central bank deployed the kitty to defend the rupee amid pressures caused majorly by global developments since last year.

For the week ended August 18, the foreign currency assets, a major component of the reserves, decreased by USD 6.613 billion to USD 527.786 billion, according to the Weekly Statistical Supplement released by the RBI on Friday.

Expressed in dollar terms, the foreign currency assets include the effect of appreciation or depreciation of non-US units like the euro, pound and yen held in the foreign exchange reserves.

Gold reserves were down by USD 515 million to USD 43.824 billion, the RBI said. The Special Drawing Rights (SDRs) were down by USD 119 million to USD 18.205 billion, the apex bank said.

The country’s reserve position with the IMF was also down by USD 25 million to USD 5.072 billion in the reporting week, the apex bank data showed.

The rupee on Friday declined by 8 paise to settle at 82.64 against the US dollar, snapping its three-day rally due to forex outflows, a strong American currency and negative equity markets.

Anil Kumar Bhansali, head (treasury) and executive director of Finrex Treasury Advisors LLP, said, “As the rupee crossed 83.00 level last week RBI seemed to be perturbed and sold dollars above 83.00 to not allow any further depreciation on the rupee front. On Wednesday RBI sold $ 2 billion from 83.01 and took it down to $ 82.6850 despite an outflow of $ 700 million from NTPC.”

The RBI also possibly verbally warned banks not to take arbitrage positions in NDF thus making them cut longs and yesterday rupee made a high of 82.36 thus giving a chance to importers to buy. Today however, as the dollar index crossed 104. Levels to 104.13 and Asian currencies remained on the weaker side of the curve rupee lost some of the gains and moved back towards 82.70 before closing at 82.65, he said.

(With Inputs From PTI)